Published: 07 June 2021
By Suzanne Evans, Director, Political Insight
Chancellor Rishi Sunak says the deal between G7 countries to agree a global minimum corporate tax rate of 15% is a “proud moment.” Speaking after two days of talks in London, he added it "meant the right companies pay the right tax in the right places" German finance minister Olaf Scholz said the deal would "change the world." He said a 15% rate would help pay back debts that have built up during the pandemic. The agreement is now set to go to the G20 financial ministers and Central Bank governors meeting in July. BBC Economics Editor Faisal Islam said: “The UK's turnaround on minimum tax rates is quite something. Successive elections have been fought on the danger of corporation tax hikes to jobs and investment. Now, not only is that policy, but the UK looks set up to have overseen an agreement to limit the extent to which a future chancellor could cut it.”
The G7 agreement targets tech giants such as Amazon, Google and Microsoft which often book profits in jurisdictions where they pay little or no tax. However, Nick Clegg, vice president of global affairs at Facebook said: "We want the international tax reform process to succeed and recognize this could mean Facebook paying more tax, and in different places." A Google spokesperson said the company strongly supports the initiative and hoped for a "balanced and durable" agreement.
The UK has signed a post-Brexit trade deal with the three non-EU EEA members, Norway, Iceland and Liechtenstein. Trade Minister Liz Truss said the agreement will be a major boost for trade between the four non-EU nations, which is already worth £21.6bn. She claimed it would boost sectors such as digital and cut tariffs on UK farm products such as cheese and meat. However, Norwegian Prime minister Erna Solberg told a press conference that some trade barriers remain, and that trade access will be inferior to what the two countries enjoyed when the UK was an EU member.
Businesses looking to secure government contracts will have to pledge to be net zero by 2050 under new requirements. From September, firms seeking public sector contracts worth more than £5m a year will also have to publish "clear and credible carbon reduction plans" before being considered, the Cabinet Office said. It means that all firms bidding for contracts will have to meet the new criteria - not just those who win. COP26 president Alok Sharma urged G7 leaders to honour the Paris Climate Agreement on Thursday by making enough emission cuts to limit global temperature rises to under 2C.
Another £800 million was wiped off the value of UK-listed travel firms on Friday, following the government’s volte face on travel advice. EasyJet, Ryanair, British Airways owner IAG, Wizz Air and engine maker Rolls-Royce saw their shares fall for a second consecutive day. Tui shares closed the day flat. On Thursday last week £2 billion was wiped off the value of shares in those companies as investors reacted to the news that no new countries would be added to the Government’s green list of travel destinations and that Portugal would be downgraded to amber, meaning non-essential travel is not advised. However, Ryanair chief executive Michael O’Leary expects another volte face: "When people are travelling in July and August there will be no restrictions on travel to and from, between, the UK and Europe, because of the success of vaccines and the fact that the vaccines are effective against this variant," he told the BBC on Friday.
Ryanair says it will appeal against funds made available to the government-owned Italian airline that will replace Alitalia as it considers them illegal state support, the chief executive of the Irish carrier said on Saturday. "As soon as this money will be injected in the newco we will take the (due) steps," CEO Eddie Wilson told Italian daily la Repubblica in an interview. Italy is close to a deal with the European Commission to launch Italia Trasporto Aereo (ITA), which was initially expected to start flying again in April. Under the relaunch, the government plans to inject €3bn into ITA, which would take over the assets of the old Alitalia. Last week Ryanair urged the EU to require ITA to bid competitively for Alitalia's airport slots. Ryanair has made no secret of its interest in picking up Alitalia slots. Under EU state aid rules, there needs to be economic discontinuity between ITA and Alitalia for Brussels to allow Rome to inject the funds into the new carrier.
The reopening of indoor hospitality has failed to reignite footfall returning to town centres, as customers frustration with queuing, QR codes and basic menus grows. New research, seen exclusively by Yahoo Finance shows the gap between footfall in May 2021 and the same time period in 2019 widened from 25.3% to just 26.8% as the month went on. A reduction in casual walk-in guests and a reduction in the culture of browsing around shops and town centres has also been blamed.
UK businesses are hiring staff at the fastest rate in 23 years and advertising the most vacancies in three years, according to a survey by KPMG and online job placement agency Adzuna. Staff shortages worsened for the third consecutive month, with recruiters citing pandemic uncertainty and the furlough scheme weighing on the availability of permanent candidates. The volume of total UK online job adverts on 28 May stood at 127% of its February 2020 average, Adzuna said, while vacancies increased across all UK countries and English regions compared with the previous week.
Small businesses (SMEs) are increasingly more confident in their ability to grow and power the economic recovery but fears about the ongoing impact of the pandemic lockdown still linger. According to new data published today by the British Chambers of Commerce 63% of SMEs are emerging from lockdown with either concrete plans or intentions to grow their business over the next year. The manufacturing sector (68%) is particularly optimistic, while 58% of the hardest hit business-to-consumer companies including hospitality, catering and retail still anticipate growth. The research in partnership with Funding Circle — the UK’s largest small business loan platform — surveyed more than 1,000 firms, almost all SMEs.
Construction activity in the UK rose at its fastest pace in almost seven years last month. According to IHS Market’s monthly construction purchasing managers index, the sector jumped to 64.2 in May from 61.6 the previous month, its highest level since September 2014. This beat expectations of a reading of 62.3. A score above 50 indicates growth.
The Volkswagen Golf was the best-selling car in Britain last month as UK new car registrations rose 674% to 156,737 in May – a huge leap because in May 2020 car dealerships nationwide were closed. However, sales were below the 183,724 purchases made in 2019, new data from the Society of Motor Manufacturers and Traders showed, meaning sales are still languishing behind pre-pandemic levels. Total registrations over the year to date remain 29.1% down on a 10-year average.
Music intellectual property investor Hipgnosis Songs Fund has acquired the music catalogue of Grammy Award-winning songwriter, producer and musician Joel Little.
Facebook is being investigated by the Competition and Markets Authority (CMA) to see whether it uses advertising data to gain an unfair advantage over rivals. CMA said Facebook collects data through its digital advertising service as well as its single sign-on option which allows people to sign-in to other websites, services and apps using their Facebook log-in details. The watchdog said it is examining whether the company has unfairly used the data to compete with other businesses through Facebook Marketplace, where firms and users put up classified adverts to sell items, as well as Facebook Dating which was launched in Europe last year. The European Commission has also opened a formal antitrust investigation "to assess whether Facebook violated EU competition rules by using advertising data gathered in particular from advertisers in order to compete with them in markets where Facebook is active such as classified ads". Facebook said it would cooperate fully and demonstrate that both the UK and EU investigations are "without merit". Back in April CMA suspended 16,000 Facebook accounts for selling and buying fake reviews for products and services.
Nigeria said it suspended Twitter indefinitely on Friday, two days after the company removed a Tweet by President Muhammadu Buhari for violating the site’s rules, according to BBC. A statement by the government on the suspension cited, "the persistent use of the platform for activities that are capable of undermining Nigeria's corporate existence." Punch Newspapers in Nigeria reported on Friday that Twitter was still accessible in the country despite the suspension.
TikTok has changed its US privacy policy to allow the app to automatically collect biometric data on users. Now, the social video app "may collect biometric identifiers and biometric information" from its users' content. "This includes things like "faceprints and voiceprints," according to the policy explained. The policy does not explain why TikTok needs this data nor does it define the terms "faceprints" or "voiceprints." The update comes as TikTok was regaining Washington’s trust; under the Trump administration a full ban was imposed on the app over concerns it was passing information it collected from users to the Chinese government.
Dr Ali Parsa, a former teenage Iranian refugee, is on track to become a billionaire from the listing of his business, Babylon Health, on the New York Nasdaq. The London-headquartered healthcare technology business is expected to launch in a deal valuing the business at $4.2bn (£3bn).
, Babylon's founder, debuted on the Sunday Times Rich List this year with an estimated net worth of £825m thanks to his ownership of just over half of Babylon's shares. The surge in valuation since then means his stake is now likely worth over £1bn.
Antony Jenkins, the former Barclays chief executive sacked as the bank’s boss in 2015, is on the verge of a deal with the world's biggest asset manager that will catapult him into the ranks of Britain's super-rich. Sky News says he is close to selling a stake in 10x Future Technologies, his fintech venture, to BlackRock. City sources told Sky that 10x could announce the deal, which will value the company at well over £500m, within weeks.
US employers created 559,000 jobs in May as restaurants, bars and hotels reopened, failing to meet economists' expectations of 675,000 new jobs. However, the unemployment rate fell to 5.8% from the 6.1% seen in April. President Biden described the report as "great news", adding: "This is progress, historic progress [after] our worst crisis in 100 years." 9.3 million people remain unemployed - down considerably from the highs seen in April last year – but still well above the pre-pandemic measure of 5.7 million in February 2020.
The price of bitcoin and other cryptocurrencies fell on Friday as Tesla boss Elon Musk again took aim at bitcoin on Twitter, tweeting "#Bitcoin" with a broken heart emoji and a series of meme images about break-ups. In February, Tesla announced an investment of $1.5bn (£1bn) in bitcoin and said it was planning to accept the cryptocurrency as payment for its cars. When critics pointed out the hypocrisy of a supposedly environmentally friendly electric vehicle company accepting bitcoin, which uses a huge amount of electricity and has a large carbon footprint, Musk abandoned the plan last month. The loss of support has taken the air out of bitcoin's price rally; the cryptocurrency reached a record high above $63,500 in early April but has pulled back sharply since then.
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